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There have been quite a few changes to planning regulations over the last few years. Many of these have been as a result of government efforts to cope with rising demand for houses and other forms of accommodation in the UK.
One of these changes came into force in March 2024. Amendments to Class MA of The Town and Country Planning Order 2021 have now been enacted. These have the effect of making it easier to obtain planning permission to convert premises previously used as businesses (Class E) into residential accommodation.
There is quite a lot of jargon in there, but basically:
- Class E refers to business uses such as shops, restaurants, offices, cafes & takeaways… or indeed virtually any kind of commercial use.
- Class MA is slightly more difficult to define. It has been described by some as meaning ‘Mercantile to Abode’, but this is more like an anecdotal ‘after the event’ kind of explanation, rather than an official definition. Basically, any planning applications for commercial to residential conversions under Class MA must be for private personal or family use, and not for Houses in Multiple Occupation (HMOs), such as shared flats or student accommodation.
Background
Anyone who regularly visits a high street shopping area or lives near a suburban shopping parade will surely have noticed an increase in the number of vacant premises. Already, many of these have been, or are under the process of being, converted into flats or other types of residential properties.
This trend can also be seen by those who search for rental properties online, on sites such as Rightmove or Purplebricks. Many of the properties available to rent are sited amongst parades of shops, and are clearly converted premises previously in use as offices or converted from retail use.
Why are there so many Empty Retail and Office Premises?
For retail premises, there are two main reasons for this long term trend.
- Online shopping has become increasingly more convenient and popular. Prices can be cheaper online than on the local high street; items required are almost always in stock somewhere online; and home delivery can be so much more convenient than having to go shopping, particularly with bulky or heavy goods.
- Out of town shopping malls can also be more convenient. Shoppers can generally park easily, and for free; they do not have to cross busy roads to get to different shops; and there can be many more different kinds of shops in a smaller total area when compared with conventional high street shopping areas.
For offices, the reasons have much to do with a change in working habits as a result of the repercussions of the COVID pandemic. Many people have become used to working from home (WFH), and employers are finding it difficult to persuade some of their staff to return to ‘normal’ office working. Moreover, other employers are quite happy with this situation, noting that it can have the advantage of saving them the cost of running such big offices.
The result is that there is a surplus of office space.
Changes to Planning Regulations: What are the Changes?
There are two main changes. For any planning application submitted on or after March 5th 2024, the commercial property for which conversion to residential use is being applied…
- is no longer required to be vacant for three continuous months immediately before the application.
- is no longer required to be less than 1500 square metres in size.
These changes in effect allow larger premises to be eligible for conversion, and reduce the amount of time that properties are required to be vacant. Both have the effect of broadening the range of applications which are eligible to obtain planning permission for change of use from business to residential.
What are the Likely Effects of the Changes to Planning Regulations?
These changes are intended to loosen planning restrictions, allowing vacant commercial properties to be converted to residential use where appropriate. This is likely to work best in sub-prime town centre areas, and in suburban locations such as neighbourhood shopping parades.
Tired and out-dated office spaces which have not been regularly updated or lack investment, could be ripe for conversion to residential use under these changes. Indeed, these kinds of premises are the target of the revised regulations.
Prime retail locations are unlikely to be affected, as the rents provided by commercial tenants are likely to be far higher for commercial property owners than that provided by private housing tenants. In addition, potential business rates are also likely to provide far more revenues for councils than those paid by council tax payers. This gives local councils (who are responsible for providing planning permission) little incentive to agree to any conversion.
For office premises, again, prime locations are unlikely to suffer large scale consequences. Purpose built, modern office space is likely to remain in high demand. Employers who DO still require office premises will tend to be looking for flexible, top quality spaces which are suitably upgraded by recent investment. These facilities will be required to encourage their possibly reluctant employees away from the familiar comforts of their homes and back into the office.
How can Advocate Finance Help?
For any landlord or business premises owner considering taking advantage of these changes in planning regulations by converting a commercial property into a residential, it is essential to seek expert planning advice from a reputable planning consultant.
Here at Advocate Finance, we are specialists in investment mortgages for commercial properties including property conversion loans for commercial to residential conversions.
We provide a FREE assessment on all our services.
Please contact us for more information, using the Get in Touch With Us Today feature at the bottom of this page.
